Weaving the Economic and Social Fabric of ZacatecasWed, 10/16/2019 - 11:42
Q: What changes can be made to the regulatory framework to boost the mining industry?
A: Three areas must be addressed. First, the popular consultations to begin projects. There must be a clear definition of what constitutes an indigenous population and a native population. Zacatecas has no indigenous population registered, so it is hard to know who are native to this region. It is crucial to define who to consult and when. Miners usually come to an agreement with landowners before the exploration stage. Only when they are ready to move on to the next stage of the mining project do they file for a concession. Therefore, the uncertainty around popular consultations has reduced exploration investment substantially.
Second, the fiscal aspect. Mining companies have adapted to the tax that goes to the Mining Fund. But Mexico is losing its competitiveness because it is impossible to deduct exploration expenses within a reasonable period of time. Companies must wait 10 years. Other countries in Latin America are more competitive in this regard. There must be a fiscal incentive where both the state and the companies win and exploration is boosted.
Third, the natural environment must be protected in a way that is also appropriate for business. Water is a prime example in this regard. Some people argue that a mining company should replace every single drop of water it uses or moves from one place to another. However, it is more reasonable to push for a moderate policy. For instance, companies should not be held accountable for water that is simply drained and moved about, but they should be for water used in productive processes such as lixiviation.
Q: How can the Mining Fund be reformed so as to guarantee wealth is redistributed adequately?
A: The great change that is being proposed is that the distribution of resources be exclusive to the Ministry of Economy through the Undersecretariat of Mining. This is desirable. How to deliver the resources is another matter. The way it has been working so far is that part of the money goes to the mining counties, while another goes to the state that oversees these counties. Then, a committee decides how to invest the resources. But the communities nearest to the mining projects were not always taken into account because the county government is often far away from them. The new formula under discussion includes mining communities to a greater extent. It also demands that mining companies be more involved in the proper use of resources. But companies feel this is too much to ask, that it goes beyond their responsibilities. The ideal scheme would be focused on the communities that are actually close to a given mining project. It would make sure that the levied taxes actually return to these communities, but in a way that really impacts their development.
Q: How is Zacatecas working to promote mining?
A: The first aspect of our plan is to fortify small mining companies in the state. What often happens is that these companies grow to a certain point in which buying them or forming other types of alliances becomes attractive. This will keep happening. The state of Zacatecas is committed to helping integrate small and medium companies, fostering the environment and value chain that makes this possible. Second, we are supporting large mining companies by upholding physical and patrimonial safety, promoting the best possible community relationships and developing supply chains. For example, we worked with First Majestic to produce social programs and monitor safety. The third part of our plan has to do with promoting a talented workforce. We have organized highly successful job fairs. Also, we facilitate collaborations between companies and universities. In one case, we partly financed a project where Datamine introduced some of its equipment into the Technological University of Zacatecas. We are working to generate the necessary talent so that the industry remains as local as possible. At our mines there are very few Zacatecan managers: most of them are from other states in Mexico. Compared to salaries in other state mining industries, Zacatecas’ salaries are the highest in the country.